You don't have to choose between "proper" and modern - both options are fine, just in different situations. A physical gift works when you have something to go on: you know the person's hobbies, their style, what they're missing. But if you don't have that to work with, giving something as a guess is riskier than giving money. A gift might not land, and it'll show, whereas money is universal and honest.
The real trap is that we often only look at two extremes. There's a middle ground: give something that will definitely be useful and doesn't require guessing someone's taste. A good towel, a quality pen, a nice candle, a tea set - these are concrete things, but they're hard to dislike. Or actually give an experience - a ticket to something interesting, not just money in fancy wrapping.
Don't rush to think you're out of touch. Honestly, people used to give things that weren't quite what others wanted too; we just didn't talk about it. Now it's just become normal to acknowledge that money isn't an insult - it's respect for someone else's choice. Just make sure before you hand over cash that it won't hurt their feelings, even in passing. In some relationships, money in an envelope sounds colder than five minutes of thought put into a decent gift.